MünchenerHyp sees new business lending fall by 21%
Despite posting half year figures which showed net interest income rising by 11% year-on-year, the Munich-based property financier MünchenerHyp saw new business lending fall sharply, against a background of higher pressure on margins and a lack of suitable assets to finance.
MünchenerHyp’s new residential and commercial property financing business fell by 21% from the same year-ago figure to €2.2bn. Private residential property financing accounted for €1.4bn of this figure with the remaining €0.8bn represented by financing for commercial property. “Along with the increased pressure on margins and loan-to-value ratios, the availability of properties in the private and commercial customer sectors contracted and could not meet the unchanged high demand”, said board chairman Dr. Louis Hagen.
The bank refinances primarily via Pfandbriefe, and it made several private placements at attractive conditions over the period, said Dr. Hagen. It then issued a first benchmark Mortgage Pfandbrief at the beginning of July, with a volume of €500 million and a term of nine years and four months, carrying a coupon of 0.625%. The issue received over €1 billion worth of orders from 12 countries in a heavy oversubscription. MünchenerHyp also issued several bonds denominated in Swiss francs.
Dr. Hagen said the bank hoped to post income for the full year at at least last year’s level. “We anticipate that our new business performance will pick up in the second half of the year due, in particular, to the expansion of our sales activities. For this reason we are confident that we will be able to increase our new business results over the first half year’s figures”, he said. Last year the bank wrote a record €5.1bn of new property lending.
Meanwhile, across the city, fellow financier pbb Deutsche Pfandbriefbank posted increased profits for the first half-year, but again, despite declining new business. In its real estate division, pbb issued or extended loans worth €3.6bn, as against €4.5bn in the same period last year. Germany accounts for half of lending, while the US saw its share grow from 11% to 13%, with France and the UK each accounting for about 10% - albeit with the UK share falling significantly on Brexit uncertainties.
The average gross margin on new business decreased over the year from 165 to 160 basis points. Despite this, interest earnings increased from €163mn to €183mn, thanks to the interest-earning property credit portfolio growing from €24.2bn to €25.4bn and refinancing costs decreasing due to maturation of higher-interest liabilities. Ultimately, pre-tax earnings in the real estate segment increased from €88m to €100m and company-wide from €103m to €122m.